Recently some of the telcos have applied for the payment bank licence to the RBI which will enable them to offer cash out without having a bank at the back end. In an interaction with Mohd Ujaley, Suresh Sethi, Business Head, M-Pesa, Vodafone India says “Payment bank licence will be a huge enabler and telcos would be able to take decisions on governance end.”
Vodafone has applied for Payment Bank licence. Why this is relevant to Vodafone Scheme of Things in India?
Payment bank licence will be a huge enabler. It will allow cash out without having a bank at the back end. It also allows us to take decisions on governance end. At the moment because of RBI guidelines, only a bank is allowed to make decisions on setting up the network. We also don’t have to depend on a bank for KYC. For example, a bank’s compliance policy may not allow e-KYC while we want to implement it. This will help us put in place a network based on assessment. In India, there are only one lakh plus bank branches. In rural areas, for every 1,000 km there are 33 branches. Penetration is only 5 per cent. As a mobile company, we are in distribution and have 1.8 million outlets. We have 8,000 exclusive outlets. Vodafone in India is already 50 per cent rural. We are strong in both distribution and mobile penetration and we have the ability to give banking services on mobile.
With payment bank license, do you see an augmented demand for telcos network being used to disburse subsidy payments?
Indeed, telcos can play very important role in the subsidies payment to intended beneficiaries. We have the capabilities to use our network to deliver money in schemes like the National Health Mission and MNREGA. The government can monitor real time reports on the disbursements. We have already done some pilots and are hoping to expand it further with other states. We are implementing the MNREGA pilot in Odisha and results will take some time to be shared. However we have successfully started the NHM program where we disbursed approximately Rs 10 lakh to over 600 women. Vodafone ‘M-Pesa’ has tied-up with ICICI to provide mobile-based wage payment for MNREGA workers. Also tied-up with National Health Mission (NHM) to provide health care subsidy operated under Government of India initiative. The money was paid transparently to the intended beneficiary. Based on this success, we are already discussing similar programs in other states. We have pitched for government subsidy schemes to be routed through M-Pesa. So with payment bank license, there would be more flexibility and telcos would be able to help government in efficient subsidies payment.
As you said Vodafone in India is 50% rural, do you see any opportunities in Government’s ambitious scheme of Jan Dhan Yojana which focuses on financial inclusion?
The Prime Minister’s Jan-Dhan Yojana which aims at financial inclusion recognises that the move towards digital India with the use of cost-effective cellular technology will fuel improvements in the delivery system. As per latest data released by telecom regulator “Telecom Regulatory Authority of India” (TRAI), the total number of mobile connections currently has risen to 943.97 million (as on December 2014). It is also expected that there will be 600 million broadband users by 2020. These dramatic numbers can be used, to reach out to the millions of underprivileged for the provision of financial services. M-pesa could be one of the key enablers for Jan-Dhan Yojana.
Countries at all income levels have population groups that are not adequately serviced by the formal financial system due to the lack of availability and access to suitable financial products. Financial inclusion in its true essence is not just about having a Bank account. True financial inclusion means the ability to be able to provide last mile access to financial services which can be delivered through any means or channel including an account. This can well be reflected by the number of active accounts in the system providing proper and convenient access to the financial system. Mobile penetration and adoption in India hold the potential of becoming a channel of choice for providing access to financial services. This coupled with a deep rural telecom distribution network presents a unique opportunity to address the challenges of last mile access.
You mentioned about M-Pesa, usually your mobile banking service in Kenya is cited as the biggest success stories. How this segment is doing in India?
Yes, Vodafone’s mobile banking service in Kenya is usually cited as the biggest success stories of mobile banking services globally. But with 85,000 banking agents, Vodafone India has already overtaken the Kenyan operations in terms of number of agents. Today over 700 businesses have integrated with M-Pesa to extend various innovative services at lower cost to the people in remote areas. We bring the bank to the mobile and addresses the issue of access to financial services. M-Pesa today plays a vital role in enabling financial inclusion and m-commerce.
In the light of significant growth in m-Commerce in recent time, has there been equally upbeat movement for mobile wallets?
Mobile commerce services in India are seeing fairly significant increases, showing that Indians are becoming comfortable buying products and services using their mobile phones. However, mobile wallets are still at a nascent stage and there continue to be innovations and experiments. Having said that, the level of customer awareness has shown remarkable improvement from what it was a few years back. This major shift has been deemed possible owing to the awareness created by telecom providers, banks and other stake holders. Given the scale of mobile users in India, mobile banking has the potential to emerge as a game changer in terms of costs, convenience and speed of reach. We have seen exponential growth in this segment.
What is one the key area that stakeholder including mobile operators, regulators and policy makers should focus when it comes to payment bank, mobile wallets or m-commerce in India?
They should focus on education. It is one of the biggest challenge. Awareness about financial inclusion and financial literacy needs to be intensified. Stakeholders, including the regulators and policy makers, should launch large scale awareness programmes. When we started, we started by mapping the migrant worker corridor — Bihar, Jharkhand and West Bengal. We first created the points where money can be received and then we developed our network in the urban centres like Delhi and Mumbai from where money is sent by workers. We are today pan-India but we have used telecom data to see where are the STD calls going. So we have mapped areas where we can break distances in terms of availability of bank branches. Today, 60 per cent of our concentration is in rural.
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